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Your money never sleeps

In the movie, “Wall Street: Money Never Sleeps,” it is revealed that Gordon Gekko, played by Michael Douglas, had stashed $100 million in a Swiss bank account prior to going to prison. He later uses the money to restart his investment firm and reestablish his prominence on Wall Street. He had set money aside to fund a future goal and his money was working for him 24/7 even while he was in prison!

Your money never sleeps

Like Gekko, your money never sleeps and it can be either working for or against you 24/7. Your bank accounts and investments will work continuously for you even while you sleep. Conversely, your creditors never sleep and are delighted to charge you interest and applicable late fees on any unpaid balances that you carry. Money is working for or against you at all times.

The challenge is how to get your arms around this sleepless monetary giant and make it work more for you and less against you. The first step is to spend less than you earn. Sounds simple, but to do so you have to understand and track your income and expenses consistently to know whether you are over or under spending.

Take the time to track your family’s income and expenses over the next 30 days. You can setup your own spreadsheet or use online resources such as http://www.moneycentral.msn.com and http://www.mymoneymanagement.net or purchased software programs like Quicken or Microsoft Money. If you are like most Americans, your expenses match your income. However, when credit card expenditures are included, many families are overspending their income.

If you are overspending, how can you reduce your expenses by 10-20 percent right now? First, look at discretionary items like your cable/satellite TV, mobile phone and computer/game expenses? Can you either find lower cost alternatives, consolidate or even eliminate a service? Next, look at items such as clothing, entertainment, eating out, transportation, etc. Consider alternative ways to reduce expenses such as buying clothes during seasonal sale periods, cooking meals at home, carpooling and using public transportation. Look at websites like the National Endowment for Financial Planning website for additional money saving tips: http://www.smartaboutmoney.org.

Pay yourself first—save

Establish a savings goal of between 10 to 20 percent of your gross income. You are probably thinking, “Sure I want to save, but I can barely pay my bills.” The secret is to save first and live on what’s left. Make savings the first item in your budget every month. Pay yourself first, because you do all the work. Set up an automatic saving withdrawal from either your paycheck or checking account. If you don’t see the money, you are less likely to spend it. If you are not saving now, start out with $100, or $200 per month.

Investment planning

The first savings priority should be the creation of an emergency fund. The purpose of the emergency fund is to pay for financial emergencies that inevitably arise, such as auto/home repairs, illness and job loss. The fund should be the equivalent of three to six months expenses and placed in a liquid account, such as a savings account or money market fund.

The next priority is to develop a regular saving and investment program. This would include 401K and similar contributory retirement plans and other investments such as mutual funds, bonds and real estate. Finally, diversify your investments by placing them in several different investment areas.

Money never sleeps. The challenge is to make the money giant serve you and for you not to be a slave to it. The dollars that you save and invest today can grow into the future and be there to help fund your future family goals.

(Michael G. Shinn, CFP, registered representative of securities and investment advisory services offered through Financial Network Investment Corp. Visit http://www.shinn­fi­nancial.com for more information or to send your comments or questions to shinnm@financial­net­work.com. Neither Michael Shinn nor Financial Network provides tax advice. The websites listed are provided as a courtesy and are not under the control of Financial Network Investment Corp.)